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Our NewsletterIssue No. 51: Distortions About Drug Prices
Impede Health Care Debate The biggest health policy story of the year isn’t the proposal for Medicare for all. It is something that has actually happened: the prices of drugs are falling. As a classic man-bites-dog tale, declining pharmaceutical prices would seem perfect for the media. Instead, the biggest story is also the most underreported story – or, more accurately, the most resisted story. But the story is important. After all, both Republicans and Democrats are promoting policy changes based on the assumption that drug prices are rising out of control. As Eric Sagonowsky put it in Fierce Pharma: “Politicians have been hitting hard at pharma for months and years, using terms such as ‘skyrocketing,’ ‘astronomical’ or ‘soaring’ to describe drug costs.” This assumption lies behind such policy proposals as allowing importation from Canada, ordering inflation caps for Medicare Part D, setting controls linked to an index of European drug prices, and so on. For example, Alex Azar, Secretary of Health and Human Services said on July 31, “For the first time in HHS’s history, we are open to importation.” Azar had previously shown disdain for importation, calling it a “gimmick.” Going into an election, President Trump may be viewing drug prices through a political lens, perhaps attempting to take the issue out of Democratic hands. Still, it surprising that he has not taken more credit for his own Administration’s unprecedented achievement and that he is, from time to time, backing proposals that his political opponents have dreamed about for years. CPI for Prescription Drugs Down 2% for Year Ending June 30 On July 11, the President’s Council of Economic Advisers Tweeted, “The Consumer Price Index (CPI) for prescription drugs decreased 2.0 percent in June from 12 months prior according to the CPI release from @BLS.gov [the U.S. Bureau of Labor Statistics] today. This is the lowest 12-month change since January 1968.” Take a look at this chart that accompanied the CEA Tweet: SEE THE TWEET AND READ MORE HERE |
What Others Are Saying"The anger directed at the pharmaceutical and biotech industries overall is misdirected. The single biggest driving force for increased health-care spending in the U.S. is the rising cost of labor, not drugs." "Even if pharmaceutical spending were rising as a share of total health care spending, but that rise was due to pharmaceutical investments driving down expenditures in other health care areas (e.g. a reduced need for more expensive surgeries), then it would still be inaccurate to argue that pharmaceutical spending is driving overall health care inflation." |